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Homeowners+Renters

Check hurricane deductible, have a plan to fund it

Understanding-Insurance-DeductiblesA

Let’s start with the most important tip about deductibles: You should NEVER select a higher deductible than you can afford.

Big deductibles reduce the amount you pay for insurance. But the higher the deductible, the more you pay out of pocket when things go wrong. That means selecting a hefty deductible is only smart in a Perfect World. And, while we all wished we lived on that planet, all kinds of disasters happen – manmade and natural – to mess with it, at least temporarily.

You have two deductibles on your homeowners insurance: one is for hurricanes and the other is for everything else. The “everything else” deductible is for things like a fire, lightning strike or water damage, to name a few. It is usually a flat dollar amount, such as $1,000. The hurricane deductible is, obviously, for hurricanes – and for homes valued over $100,000, it starts at 2 percent of what the home is insured for, which is what it would cost to rebuild it. So, if the house is insured for $250,000, a 2 percent deductible would be $5,000.

In Florida, you can select up to a 10 percent deductible. And, some people decide to do that, which is fine if you have a plan to save that amount of money and keep it secured for when the wind blows.

Here is a handy factsheet on how insurance deductibles work in Florida. The Florida Office of Insurance Regulation explains when hurricane deductibles go into effect and how long they last. Regulators also require this notice on the declarations page of every homeowners policy, in boldface type of at least 18 points:

“THIS POLICY CONTAINS A SEPARATE DEDUCTIBLE FOR HURRICANE LOSSES, WHICH MAY RESULT IN HIGH OUT-OF-POCKET EXPENSES TO YOU.”

Now is the time to verify that the deductible amount you chose makes sense for your circumstances.

What the…..? Hail in Florida!

HailstormA

The Sunshine State and golf ball-size hail go together like hot sauce on ice cream (a taste treat some might think is not a bad idea….). Parts of South Florida got hit with the unfamiliar icy pounding last week, when hail damage was reported in six states.  Hail hit Orlando hard last month, bringing almost a foot of slushy melting crystals and turning the earth into a winter wonderland, of sorts, over the Easter weekend. The last time such a large hailstorm hit the area was in 1992.

Damage from hail causes about $1 billion dollars a year in losses to crops and property.

Florida homeowners pay highest property insurance premiums because state still owns #1 position for disasters

house prices

Guest Blog by James Lynch, FCAS MAAA
Chief Actuary and VP of Data and Information Services

Here’s a question we get every year: Why does Florida have the most expensive homeowners insurance in the nation? The answer is easy: It is the riskiest state to write homeowners insurance.

The average Florida homeowners policy cost $2,115 in 2013, according to a report released last week by the National Association of Insurance Commissioners. That’s highest in the land. Texas is No. 2 ($1,837), and Louisiana is No. 3 ($1,822). We have a ranking of the states at the Insurance Information Institute web site.

Florida regulators say water claims costs increased over 14 percent in five years

finger in dike

A recent blog post on assignment of benefits (AOB) pointed out two things: the rise in the number of water damage claims and the rise in the cost of repairs for that damage. Some insurers forewarned of this trend driving up claims costs, and now there is data to  show the alarm bells bear heeding. An analysis of five years of water claims released today by the Florida Office of Insurance Regulation turned the AOB alarms from anecdote to fact.

Assignment of Benefits: A sign of a scam?

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They make it sound so simple. You have a sudden water leak in your house. You call a plumber who makes an emergency repair. He tells you there is water damage because it was a sneaky leak that went undetected for long enough to mess with pipes or cabinets or kitchen tile – or the balance of the cosmos. “Let me call my buddy,” he says. “He handles the dry-out process so you won’t have more troubles. Sign this form that transfers your insurance claim, we’ll get you a lawyer to work with your insurance company. Don’t have to worry about a thing.” This is the point at which you should commence to worry.

Signing over your insurance claim means you’ve agreed to step away and let a stranger handle things. And, you may have NO idea what goes on behind the scenes. Here’s a peek: The plumber got a nice referral fee for inviting the water dry-out company to your house, and that guy got money for looping the building contractor in, who also brought in a friend to handle the carpentry, and the attorney figures out a way to file a lawsuit …. Get the picture? You’ve heard the phrase, “Too many cooks spoil the soup.” What do you think too many non-essential people do to the cost of an insurance claim? And, when hundreds of people are roped into this type of scenario, what do you think happens to the cost of homeowners insurance? Yes, easy questions.

The cost of insurance is the cost of claims. Claims go up, insurance goes up. The Consumer Protection Coalition has a number of resources to explain this phenomena called Assignment of Benefits (AOB). Florida insurers have been trying to rein in the practice for a couple of years. There are a couple of bills circulating in the Legislature. Interestingly – or maybe predictably – other states don’t seem to have this as an issue. That tells you something.

Look at the water claims data from Citizens Property Insurance. Their analysis shows that the frequency of water damage claims is up by 45 percent from 2010 to 2014. And, the average cost of each claim rose by 43 percent over that time frame. No, water leaking from pipes has not become over 40 percent more forceful in that four-year time-frame.

Plugging that leak is what the AOB issue is about.

Insurance 101 for College Students

college-kids-moving-into-dorm

College campuses are coming to life this week as students launch the fall semester. Trailers, trucks and overloaded trunks are emptying into dorms, apartments and rental homes in every college town from coast to coast. Think college-bound students don’t own much stuff? Just ask the friends and family helping them haul it! College students typically own thousands of dollars of assets, and insurance protects it.